Greening the Future

The German energy market is undergoing radical change in line with the government’s initiative to transition to sustainable energy. The electricity infrastructure is expanding rapidly, generating numerous opportunities for foreign suppliers.

November 2019

Enapter builds clever electrolyzers that can convert electricity into hydrogen. In 2018, the Thai company opened an office in Berlin and is set to start mass production in Germany. Thomas Chrometzka, Enapter’s head of strategy, says the location was a natural choice for the company: “Germany is a pioneer because of its energy revolution and offers ideal conditions for us.”

Germany is in the midst of the so-called Energiewende (energy transition), the overhaul of its electricity supply. In 2022, the last nuclear power plants are due to be taken off the grid. By 2025, up to 45 percent of the electricity is to come from renewable sources: wind, sun, water and biomass. According to a recent evaluation by the Fraunhofer Institute for Solar Energy Systems, around 41 percent of Germany’s electricity already comes from renewable sources. But Germany still needs intelligent infrastructure to ensure that the Energiewende succeeds.

E.ON’s Arkona Offshore Windpark in the Baltic Sea is powered by 60 turbines of the Siemens Gamesa Wind Power SWT series, with a total output of 385 MW. Pictured here with substation AB00.  © Paul Langrock/Zenit/laif

One of the biggest challenges, for example, is compensating for weather-related fluctuations in energy production. Wind energy also has to be transported from the north to the south of Germany. These demands open up opportunities for companies in various sub-sectors: software and hardware manufacturers and producers of energy storage devices, for instance. And because Germany is increasingly focusing on electromobility in the wake of the energy revolution, the charging infrastructure for e-cars is also a growing market.

The first of these sub-sectors involves the expansion of the electricity network itself. Intelligent power grids, or ‘smart grids,’ help to identify and prevent bottlenecks in energy distribution in timely fashion. In 2016, the German government passed a law to support the digitalization of the energy system and set a target to digitalize all electricity meters and connect them to the Internet by 2032.

Facts & Figures

5.5bn

Sales of energy storage systems in Germany in 2019 – for both domestic and commercial use

4m

The estimated demand for public charging points for e-cars in Germany in 2050

45%

of Germany’s electricity will come from renewable sources – wind, sun, water and biomass – by 2025

Sources: German Energy Storage Association (BVES), Federal Ministry for Economic Affairs and Energy, Fraunhofer Institute for Energy Economics and Energy System Technology

Opportunities for growth

There are a number of entry opportunities in Germany for companies that develop software for controlling smart grids. The Italian IT company Prosume, which produces software for smart meters, is one firm trying to gain a foothold in the German market. “There are many small distribution network operators who want to organize their own infrastructure,” says Alex D’Elia, co-founder of Prosume’s parent company Mangrovia. “This makes Germany an attractive location. Thanks to intelligent grids, utilities and grid operators, we can see not only how much electricity is generated but also what quantities of electricity consumers demand at what time. This enables dynamic electricity pricing that can vary within a day.”

The share of renewable energies within total electricity production in Germany has steadily increased over the past ­decade.

Storage, allowing energy to be conserved for periods of low production, is a second growth market. Home storage is about to become widespread. For a long time, lithium-ion batteries were considered too expensive for domestic usage, but in recent years their price has fallen from EUR 400 per kWh of storage capacity to EUR 107 per kWh. The market research company EupD Research predicts that there will be 8 million such storage units in private households worldwide by 2030. With around 125,000 installed home storage units, Germany is already the largest sales market.

A third market with bright future prospects is charging station infrastructure for electric cars. By the end of 2018, there were 150,000 e-cars in use on German roads, and as of mid-2019 there were more than 20,000 public charging stations for them – a yearly increase of 50 percent. The number of charging stations will continue to rise thanks to a government subsidy programme to support the infrastructure. The target is to get at least ten million electric vehicles on German roads by 2030. Companies that offer charging column hardware or billing systems will also find a wealth of opportunity in Germany.